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April 7, 2014 By: galadmin

GM Didn’t Fix Faulty Ignition Switch Since It Would Cost $1 Per Car

General Motors Co. reportedly decided in 2005 not to change an ignition switch, which would eventually be linked to the deaths of at least 13 people, because it would have added about one dollar to the cost of each car, according to an internal GM document provided to the U.S. congressional investigators.

The U.S. House Committee on Energy and Commerce released the documents on Tuesday as several lawmakers questioned Mary Barra, GM’s CEO, as to why GM failed to recall 2.6 million cars until more than ten years after it first knew there was a switch problem that could cut off power to engines and disable airbags, power steering and power brakes.

Barra called the company’s failure to act in 2005 “unacceptable.”

Colorado Congresswoman Diana DeGette cited a 2005 GM document that she said showed a cost of 57 cents per fix.

Although DeGette did not release the document, Reuter based its report on a series of 2005 emails between GM engineers debating whether to make a change to the ignition switch. The change would have cost an extra 90 cents per unit and additional tooling costs of $400,000, one email showed. Those tooling costs typically are amortized over many years.

Barra said the concept of turning down the change because of tooling costs was “very disturbing. That is not the way we do business in the New GM.”

In the email exchange, John Hendler, one of the engineers, said his team was prepared to continue using a switch that was made by Delphi Automotive and approved by GM, even though Delphi told the automaker in early 2002 that the switch did not meet GM’s performance specifications.

Hendler said the cars, including the Chevrolet Cobalt and Saturn Ion, which were both recalled this year, would continue using the old switch “until the piece cost can be eliminated or significantly reduced,” and targeted a new switch for 2009 models.

It was reported in the documents that another GM executive, Lori Queen, who had responsibility for the development of GM’s small cars, responded, “I’m not sure it’s ok to wait.” She did not explain herself in the email. Phone calls to Queen were not returned for comment.

Whenever Barra was questioned about GM’s weighing of costs, even in situations of safety, Barra repeatedly answered that since the company’s 2009 bankruptcy they were changing from a “cost culture” to one focused on customers. She promised to put safety before profits in the new GM. “Today, if there is a safety issue, we take action,” said Barra. “If we know there is a defect, we do not look at the cost associated with it, we look at the speed at which we can fix the issue.”

In the early 2000s, GM and many other Detroit automakers were under extreme pressure to cut costs to compete with overseas rivals and high labor costs. This, as well as other financial issues, eventually led to GM’s 2009 bankruptcy.

This is good news going forward, but doesn’t mean much to the families of the victims whose lives were lost due to GM’s negligence. They need more than apologies.

We will continue to bring you updates as they become available regarding the GM lawsuit. For more information, contact one of our Gacovino Lake attorneys at 1-800-246-HURT (4878).

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